Mead Johnson Agrees to Pay $12 Million to End SEC China Probe

Mead Johnson Nutrition Co. agreed to pay $12 million to settle Securities and Exchange Commission allegations that the company paid health-care professionals in China to recommend its baby formula.

The baby formula giant misused marketing and sales funds in China from 2008 to 2013, giving medical professionals at state-owned hospitals about $2.07 million in payments, the SEC said Tuesday in a statement. In agreeing to the settlement, Mead Johnson didn’t admit or deny the allegations.

Mead Johnson received about $7.77 million in profits from the improper payments, the SEC said. “Mead Johnson failed to devise and maintain an adequate system of internal accounting controls over Mead Johnson China’s operations sufficient to prevent and detect the improper payments that occurred over a period of years,” the agency said.

Earlier this month, the Glenview, Illinois-based company cut its 2015 sales and profit forecast, saying a slowing Chinese economy was disrupting the market. Last year, Mead Johnson got 31 percent of its sales from China.

“We are pleased to have reached this final resolution with the SEC,” Kasper Jakobsen, Mead Johnson’s chief executive officer, said in a statement. “Our China business is one of Mead Johnson’s most important operations, and we remain confident in its continued long-term growth.”

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